Glencore production in line with guidance, with suspensions in copper, zinc, coal

Anglo-Swiss miner Glencore said that that its production was in line with guidance for 2016 with an increase in nickel mined and production suspended for copper, zinc, coal and oil.

The FTSE 100 company maintained its production guidance for 2017.

For calendar 2016, nickel production surged 20% to 115,100 tonnes compared to the previous year, when a scheduled maintenance programme in 2014 affected throughput at the smelter in Sudbury.

Copper production was 5% lower to 1.42m tonnes due to suspended production at Glencore’s African copper assets, this was partly offset by higher grades and throughput in South America.

Zinc production fell 24% to 1.09m tonnes following cuts in production, particularly in Australia and Peru.

Coal was down 5% to 124.9m tonnes following the sale of its loss making Optimum Coal business to Tegeta Exploration and Resources.

Glencore's oil interest dropped 29% to 7.5m barrels after the depletion of existing oil fields.

The company said that it was making progress with potential extension projects and some exploration successes. The Coroccohuayco copper project in Peru upgraded 184m tonnes to ore reserves at -1% copper during the year, and Glencore's Zhairem zinc project in Kazakhstan upgraded over 60m tonnes to ore reserves with more than 4% zinc.

Its Vasilkovskoye gold project, also in Kazakhstan saw it gold ore reserve base increase by 14m tonnes, or 16%, with resources up by 44m tonnes.

Commenting on the company's update, Liam Fitzpatrick at Credit Suisse said: "The deleveraging strategy that began in autumn 2015 has now been largely achieved and the company continues to deliver consistent guidance and good operational and cost control. We do not believe the reduction in debt levels and recovery in cash flows has been fully priced in by the market, the business is well diversified and latent capacity growth in copper and zinc has the potential to expand group production volumes by ~20% by 2019 at very low capex."